Good article about Sony and Howard Stringer Warning LONG!

In the Wall Street Journal. Also some behind the scenes info about Ken K's losing his position (seems they didn't get on! and Mr Stringer wasn't to happy with the Japanease price cut!), and some other misc PS3 info as well.

Well worth a read for those interested in Sony.

Howard Stringer, Japanese CEO
Caught between two worlds, the Sony chief tightens his management grip. Will it work?

By YUKARI IWATANI KANE and PHRED DVORAK
March 3, 2007; Page A1

TOKYO -- Howard Stringer is annoyed. Since becoming Sony Corp.'s first foreign chief executive almost two years ago, he has been slammed by Japanese financial analysts and Sony employees for being disconnected from the company's daily operations, especially during two big crises. Investors in the U.S., meanwhile, have put him under constant pressure to fix Sony's problems more quickly. And he was hearing conflicting advice from both sides.

"Look, in America, I was told to cut costs," Mr. Stringer says. "In Japan, I was told not to cut costs. Two different worlds. In this country, you can't lay people off very easily. In America, you can."

In a series of interviews at the end of a tumultuous year for Sony. Mr. Stringer says he balanced those competing demands to squeeze 4% growth out of Sony's electronics business and beat earnings estimates for four successive quarters. Sony's stock price has risen 44% since he took over in June 2005. He bristles at criticism, mostly from Japanese, that he lives in a hotel when in Tokyo and spends too much time in New York and London to run the company effectively.

Says Mr. Stringer, sitting in a conference room in Sony's Tokyo headquarters: "If I'm not running the company, who the hell is?"

Fixing this iconic Japanese company is one of the biggest challenges in business. Mr. Stringer's dilemma is that he is caught between different management styles and cultures. He says he recognizes the risk of falling behind amid breakneck changes in electronics. But he says there's an equal risk in moving too aggressively.

"I don't want to change Sony's culture to the point where it's unrecognizable from the founder's vision," he says. "That's the balancing act I'm doing."

Whether he can pull it off is still an open question. For the Welsh-born executive, the task is complicated by having to navigate a sea of obstacles, from uncommunicative top executives -- one surprised Mr. Stringer with bad news at a board meeting -- to poor public-relations advice. The risk to Sony from his management-through-persuasion is that the company could fall further behind nimbler and more aggressive rivals. Mr. Stringer has already shifted gears once, adopting a more assertive stance after his softly-softly approach faltered.

When he became CEO, Mr. Stringer started cautiously. He knew that despite its global brand name, Sony remained a traditional Japanese company, full of employees with lifetime tenure who were suspicious of change. Japan had opened up to the idea of having foreign managers run Japanese companies, notably Carlos Ghosn at Nissan Motor Co., but it hadn't necessarily embraced the Western style of management.

Mr. Stringer, 65 years old, stuck with the executive team he inherited. He tried gently persuading managers to cooperate with one another and urged them to think about developing products in a new way.

The dangers of that approach quickly became clear. Two big missteps -- a delayed launch of the PlayStation 3 videogame console and an embarrassing battery recall -- tarnished Mr. Stringer's first years in charge. In both cases, managers tried handling problems in the traditional Sony way: quietly and without informing top executives.

Last fall, Mr. Stringer put together an executive team more to his liking. The reshuffle included moving an uncommunicative star executive, Ken Kutaragi, from his position running Sony's videogame unit. Mr. Stringer now receives every report about manufacturing problems -- "more emails than I care to read," he says.

In one of the interviews, Mr. Stringer counseled patience to his critics, noting that his turnaround of Sony's U.S. operations took five years to complete. "You can't go through a Japanese company with a sledgehammer," he said.

...........

Engineers in Charge

When he was named CEO, Sony was in a poor state, a company built on hardware engineering that was floundering in the age of software. For decades, Sony had produced the gold standard of consumer gadgets such as televisions and tape players. Sony made products the old way, first developing hardware, then, almost as an afterthought, adding software to make it run. The Walkman, the epitome of the company's success, was a triumph of electronics engineering; ever since, Sony's innovations have focused largely on hardware design -- making products smaller, thinner and lighter.

As Apple Inc. has shown, most spectacularly with its iPod music player, nifty software is the ticket to creating hit gadgets these days. In 2005, it wasn't only the iPod that was vexing Sony. Competitors such as Microsoft Corp. -- a software company -- were eating into Sony's gadget business, especially its famed PlayStation.

One of Mr. Stringer's goals was to encourage Sony's hardware engineers to treat software seriously when developing products. But Sony's culture celebrates proud innovators who do what they want. Many still quote an admonition by one Sony veteran: If you have the misfortune to be under a clueless boss, don't tell him about new ideas -- just execute them.

For example, last summer, more than 100 Sony colleagues attended a mock funeral thrown by famed engineer To****ada Doi. He had resigned after his pet project, the Aibo robotic dog, was axed, one of many activities Sony deemed superfluous. At the ceremony, the 42-year Sony veteran recalls saying that the Aibo was a symbol of a risk-taking spirit that was now dead.

Mr. Stringer didn't know much about electronics, Sony's core identity, when he took over. His careful approach, a hallmark of his time in the U.S. as well, was evident from his first days, notably when he decided to keep -- and defer to -- the Japanese executive team chosen for him by his predecessor, Nobuyuki Idei. The executives were electronics veterans familiar with Sony's operations in Japan.

But soon after, Mr. Stringer was upset he couldn't unveil cuts in the company's product line because his top executives had not finalized their plans.

The executives "were all put in place," says Mr. Stringer. "What was I supposed to do? Show up on Monday and say, 'I don't like who you've given me?'"

Sony President Ryoji Chubachi emerged as Mr. Stringer's right-hand man. Mr. Chubachi, 59, was promoted at the same time as Mr. Stringer after having spent his career overseeing components such as videotape. His primary experience in software was the programs Sony embedded in hardware devices, not the kind of modern outlook Mr. Stringer was after.

"To be honest, it didn't click with me at first when Howard first talked about the importance of software," Mr. Chubachi says in an interview.

.......

Hard Work on PlayStation

Another stumbling block was Mr. Kutaragi, the renegade head of Sony's videogames division who invented the PlayStation videogame consoles, the company's most successful marriage of cutting-edge electronics technology and software. Mr. Stringer hoped Mr. Kutaragi would come up with similar hit ideas for Sony's other products.

Mr. Kutaragi was notorious within the company for his reluctance to communicate with his bosses or other units. In 2005, Mr. Kutaragi hosted an event at a big electronics conference in Las Vegas to celebrate the U.S. launch of the PlayStation Portable handheld game machine -- one of the company's biggest products that year. He didn't invite executives from Sony's electronics division, which provided the parts.

In developing the PlayStation 3 console, the device's latest iteration, Mr. Kutaragi went over budget on development costs without informing Mr. Stringer, according to a person familiar with the situation. When Mr. Stringer urged Mr. Kutaragi to have dinner with the heads of the electronics division, he did so just once a year, this person said. A spokeswoman for Mr. Kutaragi declined to comment.

Mr. Stringer tried to win Mr. Kutaragi's cooperation with patience. "I've had dinner with [Mr. Kutaragi] more times than I've had dinner with my wife, and that's not really healthy," Mr. Stringer says.

In September, Mr. Kutaragi announced Sony was halving shipments of the new PlayStation to the U.S. and Japan and was pushing back its European launch. At a news conference, Mr. Kutaragi blamed Sony's electronics group for failing to produce enough of a critical component, exposing his tense relationship with the division.

"If we're asked whether Sony's quality of manufacturing has declined, I would have to say 'yes,'" Mr. Kutaragi told reporters.

At a board meeting a few weeks later, Mr. Kutaragi sprang another surprise on Mr. Stringer, suggesting he drop the price of the entry-level PlayStation 3 console by 20% to just under 50,000 yen (about $420) to make it more competitive.

"It wasn't financially one of my best moments," Mr. Stringer says. "The budget implications were self-evident. [But] I agreed because I wanted the launch to be successful."

The price cut will help double videogame-related losses for Sony's year ending March 31 to about $2 billion, erasing many of the efforts made by other units to boost profitability. "I think it's fair to say that any time you're aiming for the stars, you're running the risk of falling a bit short on your timetable," Mr. Stringer says.

In another interview, conducted just after the battery-recall crisis, Mr. Stringer's forbearance was wearing thin. "I'm going to do what I want to do now," the chief executive said. "I'm not going to be following everybody's suggestions. I've got to be true to myself in some ways.

Mr. Stringer says nothing has changed in his management style. The perception of him as a hands-off manager, he says, was fueled by his decision to live in a Tokyo hotel. The CEO says he now regrets that decision, but also rejects as "insane" the notion that he wasn't firmly in control. He says his response to the crises wasn't a change of heart but a quickening of his long-term plans. He adds that his record has been obscured by the battery crisis, "which took too long for bizarre Japanese reasons that I don't want to spend the rest of my life discussing."

Mr. Stringer started life as a TV reporter. He spent nearly three decades at CBS Inc. -- he became a U.S. citizen in 1985 -- eventually rising to become head of broadcasting. He made his name at Sony leading a turnaround of its U.S. entertainment operations, including streamlining its movie and music businesses, slashing hundreds of jobs.

......

One casualty of Mr. Stringer's early hands-off style was Connect, a unit set up before his arrival that he nonetheless championed as an example of collaboration between hardware, software and services. Connect's task was to create a portable music player and online music service under the Walkman and Connect brands to challenge Apple's iPod and iTunes.

Connect had two presidents -- Sony hardware veteran Koichiro Tsujino in Tokyo and Philip Wiser, an online music pioneer, in New York. The two clashed. Mr. Tsujino wanted to build a new type of software from the ground up, while Mr. Wiser wanted a more conventional approach. As the feuding intensified, they complained to Mr. Stringer about the dual-president system, say people familiar with Connect. Mr. Stringer declined to intervene, asking the two to work out the problems on their own, the people say.

The new software packaged with the Walkman, a compromise solution, was so error-prone that U.S. executives refused to sell it. Sony eventually abandoned the software in Japan, too. By mid-2006, Messrs. Tsujino and Wiser had both quit Sony, and the Connect unit had been disbanded.

Mr. Stringer concedes backing off. But he says Connect was a vestige of the old Sony way of doing business, where executives ran independent fiefs. "We learned from the lesson that we are not developing software that way anymore," Mr. Stringer says.

After the Connect unit was disbanded, the entire business, including hardware, software and services, was moved to Sony's audio devices group under the control of Yutaka Nakagawa, an executive who was openly skeptical of the Connect music service, according to Sony managers. He told colleagues that Sony should concentrate on its strengths in hardware.

Mr. Nakagawa declines to comment, other than to say that Connect "didn't seem quite right."

.........

A Battery of Problems

Meanwhile, another crisis was bubbling over. In August, Dell Inc. announced it was recalling 4.1 million laptop computer batteries made by Sony after the PC company decided they posed a danger of overheating and catching fire. Dell's recall triggered a stampede by other computer makers and prompted Sony to launch a voluntary global recall program in late September.

Mr. Stringer says he first heard about the magnitude of the problem not from his own managers but from Dell founder Michael Dell.

The problem: In Sony's typical independent fashion, the battery subsidiary, Sony Energy Devices Corp., tried solving the issue itself, says Mr. Stringer. Instead of treating the matter as a public-relations challenge, the battery executives saw it as one of engineering.

Mr. Stringer says he erred by deferring to his Japanese deputies' suggestion that he avoid public comments about the battery recall. The idea was to contain the problem in the components division, but Mr. Stringer's silence gave the impression among Japanese press and employees that he wasn't taking responsibility for one of Sony's worst public-relations disasters. The constant stream of reports about battery fires was "a kind of Chinese water torture," Mr. Stringer recalls, and prevented the company from putting a lid on the matter.

Within Sony, Mr. Stringer's silence disappointed some employees, several executives say. Some questioned Mr. Stringer's commitment to the electronics business because of his living arrangements in Tokyo, a complaint echoed among local financial analysts.

"Mr. Stringer has no background and he's not in Japan managing the day-to-day, so it's impossible" to run the company effectively, says Tatsuya Mizuno, an electronics analyst for Fitch Ratings. "Sony's DNA is in electronics...so the top management needs to understand what's going on there."

Home, Sweet Home

Mr. Stringer bristles at the idea that he isn't committed to Tokyo. "I have a home in England and I have a home in New York -- I'm already bloody cross-cultural -- and I just didn't want to be in a lonely apartment somewhere in Tokyo even for symbolic reasons."

At the same time, Mr. Stringer says he should have "faked it better -- I mean that seriously." He says Mr. Idei warned him about what might happen if he didn't establish a home here. "I should've put the flag up the flagpole and said here's my residence in downtown Tokyo -- I'm here! -- even if it's less practical than living where I live, and much less comfortable and friendly." He still lives in a hotel.

The two crises were a wake-up call. In videogames, Mr. Stringer says he persuaded Mr. Kutaragi to give up day-to-day control of the division in December; he remains chairman and chief executive, focused on next-generation games. Mr. Stringer replaced him with the U.S. head of the videogame unit, a longtime ally.

In electronics, Mr. Stringer moved Mr. Nakagawa, the executive who questioned the role of software, to a unit overseeing batteries, chips and other components. Messrs. Stringer and Chubachi receive daily emails alerting them about manufacturing problems companywide via a product-safety officer who was appointed in the fall.

Mr. Stringer also put all of Sony's consumer gadgets under Katsumi Ihara. Mr. Ihara played a key role in jump-starting the mobile-phone joint venture between Sony and Telefon AB L.M. Ericsson of Sweden, which has built a reputation for style.

Mr. Ihara has set up a task force, based in the U.S., to develop products that will allow users to download content from the Internet onto Sony products like the Walkman and PlayStation. He also created a center in Tokyo to develop software.

One early effort: a module for TVs that allows users to watch video from the Internet using a remote control. It uses some of the same software as the PlayStation 3 console.

Mr. Stringer says the rough experience of the past few months gave him an opening to speed up his plans. "All crises create opportunities," he says. "While we were being beaten up on the one hand, it was an opportunity to accelerate the transformation."

No doubt and I think this is the guy to do it. The divisions that he has gotten under his control have shown improvement in a relatively very short time.

I was excited to learn about his new level of involvement in the Playstation division. Wish it would have been sooner but at least it happened and in the end think the consumer and company will benefit from it.

Kutaragi is still there, just not controlling everything and that is how it should be. He is a creative mind but not necessarily the best business mind especially in these ever changing and more demanding times.

Link?
Anyway the article seemed a bit negative, It maybe just the way it was typed but it just say's to me
"Sony is in trouble, And it the Japan departments fault"

Think it is the way it was done because there is a positive underlying message...at least in my opinion.

Sony was in trouble but is slowly overcoming that because of Stringer. We are able to see the Stringer effect with the rise in growth and stock. Now he has positioned himself to get a grip on the Playstation division.

The negativity comes mostly in the form of his difficulty with older members of the corporation and is to be expected. Change is never easy especially with those set in their ways.

To me all it is saying is that the change has benefited the company but it hasn't been easy and won't be easy as he works his way through the different departments bringing them in line.

Think it is the way it was done because there is a positive underlying message...at least in my opinion.

Sony was in trouble but is slowly overcoming that because of Stringer. We are able to see the Stringer effect with the rise in growth and stock. Now he has positioned himself to get a grip on the Playstation division.

The negativity comes mostly in the form of his difficulty with older members of the corporation and is to be expected. Change is never easy especially with those set in their ways.

To me all it is saying is that the change has benefited the company but it hasn't been easy and won't be easy as he works his way through the different departments bringing them in line.

Totally agree with what you said.

This is a good article, really puts a human face on Sony, with warts and all.
Hopefully those changes that Stringer implemented will start to improve Sony. We shall see.

That was a very good read. I think it shows that sony is now adapting to a different kind of management while still being true to its roots in hardware. I didn't relies that things in the company are kept secret from other departments, but its good that thats changing and people are being put in charge of areas that they are actually suited for. Hopefully we'll see some new software from sony that could be useful. A long term goal might be to some how provide some competition to microsoft windows, just a thought :P

I didn't relies that things in the company are kept secret from other departments, but its good that thats changing and people are being put in charge of areas that they are actually suited for.

This is how most Japanese companies work, Nintendo used to work like this until Reggie came along apparently.

This is why some developers didn't know about the Tilt function on Sixaxis until only a week or two before it was announced. This was also one of the main reasons why Sega fell so badly because they refused to co-operatate between the Us and Japan devisions.

Funnily enough this was also one of the reasons why the Nazis didn't do so well in WW2, they had a restriction that no one research team could work with another, this meant that at one point they had over 50 teams working on proxy mines and none of them knew of anyone else's mines!

Luckily it looks like Sony is in good hands since the new direction is exactly what they need. And no I'm not trying to link Sony to the Nazis!

Yup, you need to move with the times or get left behind! Sony was slow doing this due to the Japanese love of tradition. Tradition can be agood thing but can also hinder you and sony found this out the hard way. I really enjoyed this article, very interesting to see what happens behind the scenes. I think Stringers plans can only lead to good things for Sony and the future of the company!

This is what happen when you PUT a Gajin in charge of the Iconic Japanese company. I really don't know what was Idie thinking when he asked stringer for the job. Sony case was not the same as Nissan, Carlos Ghosn stayed in Japan and worked with the Japanese management. Stringer comes to Japan only a fews days on every months. Plus, Stringer couldn't even speak a single word of Japanese. Did you really think that every TOP Sony executive will accept stringer as the NEW CEO.

The Feud between Kutaragi and Stringer did not surprise me at all. Afterall, Kutaragi was passed for the CEO jobs. Of course Kutaragi would be just a little piss OFF. It was not Kutaragi fault that the electronics divsion was losing money, in fact the PlayStation was the only electronic dvision that was MAKING any real money for Sony.

Sony was in a mess, that fault lies within the previous CEO, Idie Nobuyuki. Sony totally mess up with the LCD productions, Nand flash memory and LCD TV. The other problem were the PRICE. Sony electronics were OVER price compared to their cheaper rival. Samsung was no where near Sony innovations, hell they pretty much copied everything Sony ever innovated. Since Samsung prouduced most of their LCD TV and other electronics in China, they can afford to sale them for less.

Things are changing now, Blu ray, Bravia LCD and the PS 3 will definitely change Sony culture for sure. Sony are making more money now than ever. Sony needs to continue to produce good quality electronics. It's the only way for them to survive in this age of Cheap Electronics. The PS 3 is only innovation Samsung can't copy.

The Sony Ways dies with Akio Morita, Sony founder, he was a master of seeing problem and fixing them. Sony needs to that find the Sony ways again. TOP Japanese graduated from Tokyo no long see Sony as their TOP employer. That title NOW belong to Toyota. There's no better company than Toyota at managing quality controls. Toyota, Honda and Canon are the finest tradition Japanese companies and they all made MORE money than Sony. Toyota made over 12 billions last years, that's like 8 time more than Sony. The problem at Sony isn't whether it a traditional company or NOT, the problem is who's RUNNING THE COMPANY.

Why the HELL is Sony Music selling songs to APPLE?

Stringer is doing a better job at fixing Sony than i had hope for, which is a very good thing. As long as Stringer can steer Sony to improve their CORE Business, which is the electronic Division, to produce innovative and quality products.

As for Kutaragi, he needs to start working with other Sony top executives most closely. If he wants to be the NEXT CEO, it's something he must do for the Sony culture to survive. Of course right now he's just focusing on the PS 3, which is something he must because the PS 3 will decide if He get promoted to CEO of Sony or NOT.

From reports I've read Kuratagi always seemed like someone who just wanted to make videogames anyway, I dont think he cared much for his innitial promotion to head of electronics because it took him away from making Playstations and put him in the position of having to deal with stuff he didnt care as much for.

I, for one, REALLY welcome Stringer taking a more hands on approach with the PS3 because he grasps the importance of software. The PS3 is a very capable machine and between Stringer calling some shots and Phil Harrison, we should see it shine to its potential. It's a shame that Kuturagi was so hard to work with, but then again, it seems like he was protecting his baby at all costs.

One thing I will say is, once those two bury the hatchet... LOOK OUT! We might see the re-emergence of "It's a Sony" haydays again!

War is fought for silence. For, it is with silence, you will know that war has ended.

This is one of the better articles I've read. I really enjoyed it and it was very insightful on the problems that were present in the corporation. Now that change has been instituted and a merger of different elements to make a better whole is present it is clear that Sony will rise to new and unprecedented heights. Thanks again "GamerG."

All I can say is thank God for Stringer, Harrison Tretton & Hirai!!!
Can you imagine what the PS3 would be like with Ken in control? THe guy has no understanding of software AT ALL. If he was allowed to launch the PS3 when he planned we really would have had a software drought lasting at least 2-2.5 years.
The interventions of the other tem members have driven the re-invigorated Sony Worldwide Studios and the incredible HOME platform that is rumoured to be coming our way.
I believe that Cell was the right choice but without the current emphasis on Software and shared programming techniques we users would be doomed. We have these Execs to thank for setting the PS3 back on the right footing.